pendergast v. united states, 317 u.s. 412 (1943)

8/17/2019 Pendergast v. United States, 317 U.S. 412 (1943)

1/8

317 U.S. 412

63 S.Ct. 268

87 L.Ed. 368

PENDERGAST

v.

UNITED STATES. O'MALLEY v. UNITED STATES.

McCORMACK v. UNITED STATES.

Nos. 183, 186, 187.

Argued and Submitted Dec. 14, 15, 1942.

Decided Jan. 4, 1943.

Mr. Ralph M. Russell, of Kansas City, Mo., for petitioner O'malley.

Mr. John G. Madden, of Kansas City, Mo., for petitioner Pendergast.

Mr. James E. Carroll, of St. Louis, Mo., for petitioner McCormack.

Messrs. William S. Hogsett, of Kansas City, Mo., and Herbert Wechsler,of Washington, D.C., for respondent.

Mr. Justice DOUGLAS delivered the opinion of the Court.

1 Petitioners, together with one Street now deceased, conceived and executed a

nefarious scheme in fraud of the federal District Court and in corruption of the

administration of justice. The short of it was that petitioners by fraud and deceitand through misrepresentations by attorneys induced the court to issue decrees

effectuating a corrupt settlement of litigation. It happened this way:

2 Several insurance companies doing business in Missouri filed with the

Superintendent of Insurance an increase in insurance rates which the

Superintendent denied. The insurance companies filed over 130 separate

injunction suits against the Superintendent and the Attorney General in the

federal court to restrain the enforcement of certain statutes of Missouri on theground of unconstitutionality. A three-judge court was convened which granted

motions for interlocutory injunctions on July 2, 1930, whereby the

Superintendent and the Attorney General were enjoined, pending final decision,


2/8

from enforcing the Missouri statutes—on condition, however, that the

insurance companies deposit the amount of increase in rates which was

collected with a custodian of the court to await the final outcome of the

litigation. In September 1930 a special master was appointed who held

hearings. During this time the premiums impounded by the court accumulated,

until by 1936 they amounted to almost $10,000,000.

3 The lure of this sizeable amount of other people's money played an important

part in the scheme which was hatched.

4 Street was in charge of the rate litigation for the insurance companies.

Pendergast was a 'political boss'. O'Malley was the then Superintendent of

Insurance. McCormack was an insurance agent. Of these only O'Malley was a

party to the litigation. Street agreet to pay Pendergast a 'fee' of $750,000 to use

his influence over O'Malley and obtain a settlement of the litigation whichwould be satisfactory to the insurance companies. O'Malley was agreeable.

McCormack was the go-between. Street made an initial payment of $100,000 in

currency which was divided $55,000 to Pendergast, $22,500 to O'Malley, and

$22,500 to McCormack. Thereafter an agreement was reached and reduced to

writing in form of a memorandum. O'Malley would approve as of June 1, 1930,

80% of the increase in rates which the companies had sought; the parties would

appear by their attorneys and join in seeking appropriate orders for distribution

of the impounded money; 20% was to go to the policy holders, 50% directly tothe insurance companies, and 30% to Street and another as trustees for the

insurance companies. The latter were to account to the companies but not to the

court or the Superintendent. The memorandum agreement was not disclosed to

the court. But on June 18, 1935, the insurance companies filed in each case a

motion reciting terms of settlement and praying for an order of distribution. On

the next day the insurance companies and O'Malley filed stipulations agreeing

that the court should make the order of distribution. Thereafter on June 22,

1935, October 26, 1935 and January 24, 1936, hearings were held in open courton the motions, and briefs were filed. Counsel, who were wholly innocent and

acting in good faith, assured the court of the honesty, fairness, and desirability

of the settlement. On February 1, 1936, the court acting in reliance on the

representations and without a hearing on the merits entered a decree ordering

distribution of the impounded funds as prayed in the motions. It also dismissed

the bills, reserving jurisdiction, however, for certain purposes.

5 Petitioners then proceeded further with their corrupt plan. About April, 1936,Street paid $330,000 in currency of which Pendergast received $250,000,

O'Malley $40,000 and McCormack $40,000. In the fall of 1936, Pendergast

received another $10,000 in cash from Street. That left $310,000 of the


3/8

$750,000 'fee' unpaid. And so far as appears it was never paid due to the

unraveling of facts which led to an exposure of the entire corrupt scheme. For

about that time an internal revenue investigation of Street's income tax revenue

disclosed that over $400,000 of the funds for which Street was to account as

trustee had been paid to unknown persons. This was reported to the Court in

February 1939. A grand jury investigation followed in which the rest of the

sordid story was unfolded. See United States v. Pendergast, D.C., 28 F.Supp.601. The Department of Justice caused Pendergast and O'Malley to be indicted

for evasion of income taxes on the amounts of money so received. They

pleaded guilty and were fined and imprisoned late in May, 1939. Id. On May

29, 1939, O'Malley's successor filed a motion praying that the decrees of

February 1, 1936, be set aside on the basis of those disclosures and that the

insurance companies be ordered to restore the funds distributed to them. The

court ordered the insurance companies to make restitution; and they did. At the

same time the court asked the district attorney whether contempt proceedingsshould be filed. About a year passed when the court on May 20, 1940,

requested the district attorney to institute contempt proceedings against

petitioners. An information was filed July 13, 1940. Motions to abate and quash

were overruled. D.C., 35 F.Supp. 593. Thereafter answers were filed and a

hearing had. Petitioners were adjudged guilty of contempt—Pendergast and

O'Malley being sentenced to two years' imprisonment and McCormack being

sentenced to probation for two years. D.C., 39 F.Supp. 189. The Circuit Court

of Appeals affirmed. 8 Cir., 128 F.2d 676. We granted the petition for certiorari because of the importance in the administration of justice of the problems

raised. 317 U.S. 608, 63 S.Ct. 41, 87 L.Ed. —-.

6 Petitioners press several objections to the judgment below. The chief of these

are that the offense was not a contempt under § 268 of the Judicial Code, 28

U.S.C. § 385, 28 U.S.C.A. § 385, as construed by Nye v. United States, 313

U.S. 33, 61 S.Ct. 810, 85 L.Ed. 1172, and that even though it was, the

prosecution of it was barred by the three year statute of limitations contained in§ 1044 of the Revised Statutes, 18 U.S.C. § 582, 18 U.S.C.A. § 582. We do not

reach the first of these questions and need not express an opinion on it. For

although we assume arguendo that the Circuit Court of Appeals was correct in

holding (128 F.2d at page 683) that the conduct of petitioners was 'misbehavior'

in the 'presence' of the court within the meaning of § 268 of the Judicial Code

and therefore punishable as a contempt, we are of the opinion that this

prosecution was barred by § 1044 of the Revised Statutes.

7 That section provides: 'No person shall be prosecuted, tried, or punished for any

offense, not capital * * * unless the indictment is found, or the information is

instituted, within three years next after such offense shall have been committed.


4/8

* * *' It would seem that the statute fits this case like a glove. If the conduct in

question was a contempt, there can be no doubt that it was a criminal contempt

as defined by our decisions. See Nye v. United States, supra, 313 U.S. at pages

41—43, 61 S.Ct. at pages 812, 813, 85 L.Ed. 1172, and cases cited. As such it

was an 'offense' against the United States within the meaning of § 1044. It was

held in Gompers v. United States, 233 U.S. 604, 34 S.Ct. 693, 58 L.Ed. 1115,

that a wilful violation of an injunction, likewise punishable as a contempt under § 268 of the Judicial Code, was such an 'offense'. And see United States v.

Goldman, 277 U.S. 229, 48 S.Ct. 486, 72 L.Ed. 862. Cf. Ex parte Grossman,

267 U.S. 87, 45 S.Ct. 332, 69 L.Ed. 527, 38 A.L.R. 131. It was said in the

Gompers case that those contempts were 'infractions of the law, visited with

punishment as such. If such acts are not criminal, we are in error as to the most

fundamental characteristic of crimes as that word has been understood in

English speech.' 233 U.S. at page 610, 34 S.Ct. at page 695, 58 L.Ed. 1115.

That observation is equally pertinent here. Moreover, we can see no reason for treating one type of contempt under § 268 of the Judicial Code differently in

this respect from others under the same section. No such difference is

discernible from the language of § 1044. Because of that and because of the

further circumstance that Congress classified them together in defining the

offense in § 268, we can hardly conclude that a distinction between them for

purposes of § 1044 should be implied. Furthermore, the fact that this

prosecution was by information, the absence of which has been held not fatal

under § 1044 (Gompers v. United States, supra, 233 U.S. at pages 611, 612, 34S.Ct. at pages 695, 696, 58 L.Ed. 1115) brings the case squarely within the

language of the section.

8 Certainly the power to punish contempts in the 'presence' of the court, like the

power to punish contempts for wilful violations of the court's decrees 'must

have some limit in time'. Gompers v. United States, supra, 233 U.S. at page

612, 34 S.Ct. at page 696, 58 L.Ed. 1115. It is urged, however, that there is no

limitation on prosecutions for contempts in the 'presence' of the court except asone may be implied from the conclusion of the proceeding in which the

contempt arises. But if we are free to consider the matter as open, no reason for

that different treatment of contempts in the 'presence' of the court is apparent.

Adams v. Woods, 2 Cranch 336, 2 L.Ed. 297, held that this statute of

limitations was applicable to an action of debt for a penalty. Chief Justice

Marshall stated that it would be 'utterly repugnant to the genius of our laws' to

allow such an action to lie 'at any distance of time'. Id., 2 Cranch at page 342.

That observation is equally apt here. Proceedings like the rate litigation out of which this prosecution arose might well continue for years on end awaiting

final disposition of all the funds. If there is a contempt, it takes place when the

'misbehavior' occurs in the 'presence' of the court. Statutes of limitations


5/8

normally begin to run when the crime is complete. See United States v. Irvine,

98 U.S. 450, 25 L.Ed. 193. Every statute of limitations, of course, may permit a

rogue to escape. Yet as Chief Justice Marshall observed in Adams v. Woods,

supra, 2 Cranch at page 342, 2 L.Ed. 297, 'not even treason can be prosecuted

after a lapse of three years.' That was still true at the time of this offense. See

R.S. § 1043, 18 U.S.C. § 581, 18 U.S.C.A. § 581. There is no reason why this

lesser crime, punishable without some of the protective features of criminaltrials, should receive favored treatment.

9 But it is said that the contrary conclusion is to be inferred from Gompers v.

United States, supra, because this Court took pains to point out that its ruling

was applicable only to proceedings for contempt 'not committed in the presence

of the court.' 233 U.S. at page 606, 34 S.Ct. at page 694, 58 L.Ed. 1115. But

that reservation, made out of an abundance of caution, also extended to

'proceedings of this sort only' (Id., 233 U.S. at page 606, 34 S.Ct. at page 693,58 L.Ed. 1115) viz. Proceedings where no information was filed. Ex parte

Terry, 128 U.S. 289, 314, 9 S.Ct. 77, 83, 32 L.Ed. 405, sanctioned summary

punishment for 'direct contempts' committed in the 'presence' of the court. The

question whether that procedure could be followed 'at a subsequent term, or at a

subsequent day of the same term' was specifically reserved. Id., 128 U.S. at

page 314, 9 S.Ct. at page 83, 32 L.Ed. 405. That is a procedural problem

peculiar to direct contempts in the face of the court (see Cooke v. United States,

267 U.S. 517, 45 S.Ct. 390, 69 L.Ed. 767) and obviously has no relevancy tothe problem of the statute of limitations.

10 The prosecution contends, however, that the offense consisted in the imposition

of a fraudulent scheme upon the court, that successful execution of the scheme

required not only misrepresentations to the court but continuous cooperation in

concealing the scheme until its completion, that the fraud on the court would

not be fully effected until 80% of the impounded funds was distributed to the

insurance companies and $750,000 paid by Street and divided among petitioners. On that theory the fraudulent scheme, though commenced before

the three year period, continued thereafter. Accordingly, it is argued, by

analogy to such cases as United States v. Kissel, 218 U.S. 601, 607, 608, 31

S.Ct. 124, 125, 126, 54 L.Ed. 1168; Hyde v. United States, 225 U.S. 347, 367-

370, 32 S.Ct. 793, 802, 803, 56 L.Ed. 1114, Ann.Cas.1914A, 614; Brown v.

Elliott, 225 U.S. 392, 400, 401, 32 S.Ct. 812, 815, 56 L.Ed. 1136, that the

statute of limitations began to run only after the latest act in the execution of the

scheme. It is true that the information was drawn on the theory of such acontinuing offense. But the difficulty with that theory lies in the nature of the

offense described by § 268 of the Judicial Code.


6/8

11 That section, so far as material here, limits the power 'to punish contempts' to

cases of 'misbehavior' in the 'presence' of the court. If this was an ordinary

criminal prosection brought under § 135 of the Criminal Code, 18 U.S.C. §

241, 18 U.S.C.A. § 241, for 'corruptly' obstructing 'the due administration of

justice', quite different considerations would govern. The fact that the acts were

not in the 'presence' of the court would be immaterial. And we may assume that

a fraudulent scheme of the character of the present one would constitute a

continuous offense under that section. We may also assume that certain

'misbehavior' in the 'presence' of the court might constitute an offense under §

135 of the Criminal Code as well as a contempt under § 268 of the Judicial

Code, so as to give a choice between prosecution before a jury and prosecution

before a judge. But the offense of 'misbehavior' in the 'presence' of the court

does not have the sweep of 'corruptly' obstructing or conspiring to obstruct 'the

due administration of justice'. Congress restricted the class of offenses for

which one may be tried without a jury. In the present case as in prosecutions for contempt for wilful violations of injunctions (Gompers v. United States, supra,

233 U.S. at page 610, 34 S.Ct. at page 695, 58 L.Ed. 1115) each act 'so far as it

was a contempt, was punishable as such' and therefore 'must be judged by

itself'. As we have said, once the 'misbehavior' occurs in the 'presence' of the

court, the crime is complete. It is conceded that but for the misrepresentations

made to the court there would have been no 'misbehavior' in its 'presence'

within the meaning of § 268 of the Judicial Code. And it is not claimed that

there were any misrepresentations made to the court within three years of thefiling of the information; or if May 29, 1939, the date when the court directed

the inquiry, be deemed the important one (Gompers v. United States, supra,

233 U.S. at page 608, 34 S.Ct. at page 694, 58 L.Ed. 1115) there is no

contention that any such misrepresentations were made within three years of

that time. It is not fraud on the court which § 268 makes punishable as a

contempt, unless that fraud is 'misbehavior' in the 'presence' of the court or 'so

near thereto as to obstruct the administration of justice'. And, if the latter

requirements are not met, the fact that the fraud may be 'misbehavior' is notsufficient. The mere continuance of a fraudulent intent after an act of

'misbehavior' in the 'presence' of the court does not make that 'misbehavior' a

continuing offense under § 268. The misrepresentations to the court made

possible, of course, the consummation of this nefarious scheme. But each

subsequent step in that scheme did not constitute a contempt unless, like the

misrepresentation itself, it was 'misbehavior' in the 'presence' of the court or 'so

near thereto as to obstruct the administration of justice'. No such showing has

been made here and none has been attempted. The fact that the scheme wasfraudulent and corruptly obstructed the administration of justice does not

enlarge the limited power to punish for contempt. It merely means that if

petitioners can be punished, it must be through the ordinary channels of


7/8

criminal prosecutions under the Criminal Code. We are forced to conclude that

any contempt committed occurred not later than February 1, 1936, when the

court ordered the distribution of the impounded funds. It was therefore barred

by the statute of limitations.

12 Reversed.

13 Mr. Justice MURPHY took no part in the consideration or disposition of this

case.

14 Mr. Justice JACKSON, dissenting.

15 I do not agree that we should leave undecided the question whether conduct of

this sort constitutes punishable contempt. To use bribery and fraud on the Courtto obtain its order for disbursement of nearly $10,000,000 in trust in its custody

is not only contempt but contempt of a kind far more damaging to the Court's

good name and more subtly obstructive of justice than throwing an inkwell at a

Judge or disturbing the peace of a courtroom. I would hold the conduct of these

petitioners to be 'misbehavior' and within the 'presence' of the Court had hence

a contempt within the meaning of the statute. I should not deflect what seems to

be the course of practical and obvious justice in this case by resort to

metaphysical speculations as to the effect of absence of the schemers from thecourtroom when attorneys whom also they had deceived obtained the order

from the Court.

16 Neither can I agree with the Court's conclusion that this contempt expired with

the setting sun and the statute of limitation then began its work of immunizing

these defendants. The fraud had as its object not merely to get the Court order,

but to get the money from the Court's custody. The contempt and the fraud did

not cease to operate so long as the money was being disbursed in reliance uponit, and by virtue of its concealment.

17 Hence, I find no good reason for interfering with the effort of the lower court to

bring these men to account for their fraud on it.

18 Mr. Justice FRANKFURTER.

19 I wholly agree with the conclusion of Mr. Justice JACKSON that the

petitioners' conduct constituted a contempt within the meaning of Section 268

of the Judicial Code, 28 U.S.C. § 385, 28 U.S.C.A. § 385. But I am also


8/8

compelled to conclude, for the reasons stated in the opinion of the Court, that

prosecution for such offense is barred by the applicable statute of limitations,

R.S. § 1044, 18 U.S.C. § 582, 18 U.S.C.A. § 582.

pendergast v. united states, 317 u.s. 412 (1943)

Documents